Rytas Staselis (ryst1966)

My interview with Maroš Šefčovič, Vice President of the European Commission in charge of Energy Union, published 02/18/16 by Verslo Žinios, lithuanian business daily.

- Which alternative currently is more compatible (coincides more) with the EU interests and the idea of the Energy Union: the transit of Russian gas via the Ukrainian gas system that would be modernized in joint efforts with the EU or the future trunk-line Nord Stream 2?

- Ukraine has proven to be a reliable gas transit country and it is in the interest of all parties for Ukraine to remain an important transit route to Europe also in the future. Ukraine is a member of the Energy Community since 2011 and has made first progress in implementing the relevant European acquis notably by adopting a new gas law. Full implementation of the Third Energy Package will ensure competitive market conditions, increase the resilience of Ukraine's energy market and ensure that Ukraine remains an important energy partner and transit country of Russian gas for Europe. This process is ongoing and is actively supported by the European Commission.

With regards to any new energy infrastructures, such as NordStream2, any new infrastructure should entirely comply with the Third Energy Package and other applicable EU legislation as well as with the objectives of the Energy Union, including the EU Energy Security Strategy. Diversification of energy sources, suppliers and routes is crucial for ensuring secure and resilient supplies to European citizens and companies.

The Nord Stream 2 project would not give access to a new source of supply and would further increase excess transmission capacity from Russia to the EU. Moreover, it could make the transit via Ukraine dispensable which would decrease the number of routes of the Russian gas to the EU from three (Brotherhood system via Ukraine, Yamal-Europe via Belarus and Nord Stream 1 via the Baltic Sea) to potentially two.

- The governments of the Baltic States firmly advocate the integration of their electricity networks with the frequency of the Synchronous grid of Continental Europe. However, Poland is the only possible onshore connection to the Continental Europe, and it does not show much interest to implement this project. How could the European Commission motivate Poland to have a greater enthusiasm (just as like it did with the first Polish-Lithuanian electricity interconnector LitPol Link?).

- Still in the end of 2014, Lithuania constituted an energy island and was totally dependent on gas and to large extent electricity imports from Russia. Thanks to Lithuania's persistence in achieving diversification, one of the main objectives of the Energy Union, Lithuania has made a breakthrough and significantly enhanced its security of supply. In electricity sector, key projects linking the Baltic States with the EU market are in particular the interconnections between Lithuania and Sweden (NordBalt) and Poland (LitPol Link), which were inaugurated in December 2015. The EU has supported this process not only politically but also financially. Immediately after the start of the operation of LitPol link, the effects of the cheaper electricity flows from Poland to Lithuania could be seen. By 2020 the interconnection capacity between Lithuania and Poland should double via construction of the second stage of LitPol Link.

However, the remaining Baltic States dependence on the Russian and Belarus electricity system is still an issue and it should be tackled and solved. The Commission is actively involved in the process of finding the preferred and economically viable solution to this issue. The LitPol Link interconnection with Poland could lay the technical foundations for synchronising the Baltic electricity grid with the Continental European Network. Given that a de-synchronisation would have impact on the neighbouring States, in particular Russia (including Kaliningrad) and Belarus, these countries need to be involved in the process once the final agreement on a preferred solution is in place.

- Isn't the alternative to synchronize the Baltic electricity systems with the Nordel system in the Nordic countries just a way stretch the time without doing anything? Many specialists even without additional studies are aware that there is one known precedent of the synchronous work of the electricity systems offshore (underwater) between Malta and Italy – an example which would be too small for the Baltic countries and often is dysfunctional?

- This is one of the options of the table but requires some further analysis. The most appropriate platform to discuss possible scenarios for the de-synchronisation of the Baltics is the recently established BEMIP Working Group on de-synchronisation. The BEMIP has become the most prominent of all regional cooperation initiatives in the Baltic Sea region. Several studies are currently and will be performed to assess the feasibility of the different scenarios, including the issue of Kaliningrad. The Commission aims at reaching a final agreement on a preferred solution as soon as possible, as a key deliverable in terms of "solidarity" component of the Energy Union Strategy of February 2015.

- In the previous Commission, in the research conducted by ECOFYS (Subsidies and costs of EU energy) showed that the effect of subsidies to the electricity market is crucial. In the market, in the power exchanges, the electricity is often sold for a price below the production costs (maybe except the old coal and hydropower plants that have paid off already). Will the European Commission continue to tolerate such situation, when the energy producers instead of competing among themselves in terms of effectivity, is competing for national, regional and EU subsidies?

One of the fundamentals of this Energy Union is that a fully functioning internal energy market, providing efficient investment signals, is the best means to reduce the need for capacity mechanisms. The Commission has already set out guidance and rules to limit the detrimental effects of badly-designed, fragmented and uncoordinated public interventions. However, effective application of this guidance can only be a first step to ensure that divergent national market arrangements, such as capacity mechanisms and uncoordinated renewables support schemes become more compatible with the internal market. Even though in some cases required and justified to address market failures, some forms of public intervention have had a serious negative impact on the effective functioning of the internal energy market. We are looking at the issue of public interventions in the context of the new electricity market design and we will also review the Renewables Directive. Both legislative proposals will be presented at the end of this year.

In addition, the Commission considers the issue of end consumer energy prices and energy costs to be crucial and already in 2014 presented a first comprehensive report on this subject. The new updated energy prices and cost report will come still before this summer and will further improve transparency as regards different components of energy prices.

- Which priority is more important to the European Commission: to implement an ambitious climate policy using all the possible means or, instead, to give more support to the development of particular technologies, such as wind, solar, biomass energy, and the amount of the electromobiles? Would the fact that not necessarily the electromobiles, but also possibly gas-based cars replaced the gasoil-based cars help the climate policy? Likewise, would it help if the coal-based power plants were changed by nuclear power plants? Why does the EU underestimate partial but progressive opportunities that could be undertaken by poorer Member States – is it because the EU wants to motivate them to invest into new and expensive technologies?

- The agreement of all EU leaders on the 2030 climate and energy framework has defined the EU commitment of at least 40% domestic reduction in greenhouse gas emissions compared to 1990. This made an ambitious contribution to the international climate negotiations in Paris last December. This reduction cannot be achieved without increased input of renewables into national energy mixes.

The EU has set a target of at least 27% for the share of renewable energy consumed in 2030. To integrate renewable production efficiently into a market, energy markets and grids have to be fit for renewables. Existing legislation and new market rules therefore must be fully implemented, enabling the roll-out of new technologies.

The European Commission's priorities complement each other within broader Energy Union strategy. Electrification of transport is important in breaking oil dependency and decarbonising transport. Europe needs to speed up electrification of its car fleet in order to be a leader in electro-mobility and energy storage technologies. This requires a full integration of electric vehicles in urban mobility policies and in the electricity grid.

If Europe is to be a global leader in renewables, it must actively promote new generation of renewable technologies and storage solutions. This will be an element of the new Research and Innovation strategy that is at the heart of the Energy Union. And will be presented later this year. Putting the EU at the forefront of smart home technology, clean transport and safe nuclear generation is central to turning the Energy Union into a motor for growth, jobs and competitiveness.

- Will the nuclear power ever be recognized as a technology that does not contribute negatively to the climate warming, despite the differing approaches by the Member States? Would such recognition expand to the degree that EU financial support could be available for the nuclear technologies, as they are now for the renewable technologies?

- Nuclear energy produces nearly 30% of the EU's electricity and half of the EU Member States use nuclear energy for electricity generation. Nuclear energy can play an important role in decarbonisation but also as regards security of supply. The EU's role is to ensure that Member States use the highest standards of safety, security, waste management and non-proliferation. Moreover, public investments into nuclear capacity has to be in full conformity with EU rules on competition (state aid) and public procurement. However, the EU Treaty lays down that national energy mix is sole responsibility of Member States including the decision to opt for or against nuclear.

- The European Union applies very stringent environmental norms to the newly built electricity new power production plants, especially with regards to the coal and nuclear power plants. However, the EU turns the blind eye to the fact that similar objects without adhering to European safety norms are built very close to the external borders of the EU (for example, a nuclear power plant that Belorussia is building 30 km from the Lithuanian capital Vilnius). Why do we discriminate our producers and force them to compete with the imports of cheaper electricity, the production of which is often based on "dirty" technologies. Will the EU ever have a policy on the approach to the production of electricity in the third countries and the import from them?

- Nuclear safety is a key priority for the European Union, and this fully applies to nuclear power plants constructed so close to the borders of an EU Member State.

The Commission has initiated stress tests after the Fukushima accident and involved neighbouring countries the exercise (Switzerland, Ukraine, Turkey, Armenia). The Commission is in contact with the Belarusian authorities, in order to organise an international peer review of the stress test carried out regarding the Ostrovets nuclear power plant.

Since 2013, the EU has been supporting the Belarusian nuclear regulatory authority through the Instrument for Nuclear Safety Cooperation. EC support aims to transfer the EU expertise and build national capacity that complies with the best international practices and standards. However, it seems that banning imports of electricity from nuclear power plants would not be an effective leverage to implement the higher levels of nuclear security and safety standards in NPPs outside the EU (not in line with internal market principles and technically very challenging).

- Does the EU have any leverage to prevent the Belorussian nuclear power plant or at least to control its building process during the construction period and not later, when the stress tests are made?

- It seems to me that Belarus is interested in conducting nuclear stress test similar to the EU ones after Fukushima, and the Commission will provide technical assistance on the basis of EU knowledge and good practice in EU nuclear stress tests.

- Central and Eastern European countries a couple of years ago have started a process to burn household waste even though it was not separated (sorted) and to produce heat and electricity. However, the EU is promoting the circular economy idea, which soon may be formalized in legislative acts. To your mind, what requirements there will be to already constructed waste burning plants, where non-sorted wasted is burned. Will they have to be closed despite the fact that according to their business plans they will pay off only after over 25 years?

- Recycling of waste by processing it into new products can make the most efficient use of the resources contained in waste. In most cases it is preferable to landfilling, from economic and environmental perspective. Where waste recycling, however, isn't the environmentally preferable option, technically no feasible or economically not viable, waste should be used to generate energy. The new Waste Framework Directive promotes production of energy from waste. ‘Waste to energy’ can therefore play a role and create synergies with EU energy and climate policy, but guided by the principles of the EU waste hierarchy.

Existing plants, which have undergone constructive or contractual adjustments concerning the energy efficiency, will follow the same procedures as new facilities under the new Directive.